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tv   Your Money  CNN  August 28, 2010 1:00pm-2:00pm EDT

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that we encountered in those terrifying days after the sorm. guards at fol som state prison n california say they have restored order after a riot. seven prisoners were hurt, we're told none of the prison staff was inured and i will see you again at the 2:00 eastern hour and we will be talking to a guest that says you should get financially naked with your partner. reveal your financial secrets and in the 3:00 p.m. hour, we will be talking to kathleen coke. that along with her book that she writes about. meantime, "your $$$$$" starts
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right now. >> welcome to "your $$$$$." christine romans is off this week. the gdp shows that in the second three months of this year the economy did grow, but slower than we expected that it did. businesses and consumers are harding cash and unemployment remains high. cnn's national core speresponde john king joins us. it is clear that races are going to be won and lost based on this economy. is the obama administration or the democrats prepared to stay the course or is it time for policy shifts heading into the election? >> what a great question. with that the democratic party is in intensive care. there is a debate within the party about whether the president needs to answer the anxiety of the american people
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and say we need to do more. but what can he do? there is a struggle at the white house. democrats now say a lot of them under their breath, that the initial stimulus bill was probably too small. so what wan tcan the white hous now? they are asking for a modest small business bill but most think that won't bring anything in the mediate term. no matter what this president does, does he change his position on letting the bush tax cuts expire? there are few things he can do in the short-term and get the congress to go along with him and have any mediate impact that is the dilemma. >> ken, i need your take on whether this is a glass, quarter full or three quarters empty.
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gdp this was a revision of the gross domestic product. that is at the right of your screen hard to see, we thought it was 2.4% growth, it is actually 1.6% growth. it superintendant a isn't a rec from ben bernanke on friday who said the hand off from government spending to consumers and business spending is underway, he painted a -- i would say a glass quarter full rather than three quarters empty what do you think? >> i think the quarter full half full is probably the right way to think about it. the debate here is should we put adrenalin into it so the patient can get up and sprint around the track before collapsing or do you have to wait for it to heal and i think we have to be
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patient. it is very, tough politically and the political options are not attractive. i'm worried about protectionism. i think they can do more with the federal reserve. i don't think there is too purchase more we -- much more e can do with stimulus. >> that will be a hard sell.muc more we can do with stimulus. >> that will be a hard sell. >> we had a week full of unclear numbers. we had home sales numbers and jobless claims that were bad and better than we thought they were going to be and a gdp that was better than the bad that we thought it was going to be. ben bernanke in the speech today that credit for consumers remains tight but is loosening.
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household savings are going to drive spending in 2011. he said credit is still tough for people who want to buy homes but interest rates remain low. he seems to be pushing this recovery off into 2011. it is taking longer than it should be. >> i think we have to realize when he speaks in public he is aware of the weight and impact of his words. so he wants to call them as he sees them, but also wants us to have a glass quarter full or half full feeling. this fed is very aware of the animal spirits in the economy, he doesn't want to get us too depressed. i want to pick up on something that the professor said about the economy having a heart attack. i think that is exactly right but the numbers point to we have had the financial criticize and
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the economy is trying to recover, but the u.s. economy is going through a structural adjustment. it is like the industrial revolution with the impact of globalization and technological change and that is painful and difficult. and i think that accounts for some of the unemployment and some of the jobs are going away and will never come back. the readjustment to populations to that is really, really tough. people didn't realize how bad things were because they could always borrow money in the atm which was their house. >> that is a useful discussion to be having. but we work on a news and political cycle that allows for quicker evaluations of how people are doing on their jobs such as the one offers by john baynor offered this week to the
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president. >> president obama should ask for and accept the resignations of the remains members of his economicstarting with the head of the national economic council. >> when you have this, it is such a dynamic economy, what does it matter to today's economy? is that politics that you specialize in or is he capturing the mood of the public right now? >> it is a stunt. what the republican leader did is a stunt. it reminds people of their overall anxiety of the economy. and of the overall failure of the obama to sell its stimulus plan to the american people and mr. geithner and larry summers are on the left. and they would love liberals to stay home in november in this
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election. so you look across the country, unemployment was stagnant all summer long, the administration said it would never go above 8%. you mentioned those housing numbers. look at nevada, 14% unemployment and a lousy housing market i knew poll out this weekend. 47% of the people in nevada think the president's policies have hurt the economy not helped it. it isn't working, a lot of democrats are frustrated with the messaging of this admi administration and people thought they were getting change in 2008, they thought the economy would be better and they don't see a lot of change and feel a lot of hurt and that could between fit republicbenef republicans. >> we have one of the finest
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economic minds around let's take a break. when we calm baome back, let's advice from this group what the president needs to do. we'll talk again in a minute.
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all right, next friday we're going to get unemployment numbers, that is the big report that we all look for. but every week we get jobless claims to give us some sense of the trend. this past week's number was still pretty bad. 473,000 people went online or called them and said, they needed unemployment insurance because they had lost their job. look at the chart over the last year. we were at 500,000 a couple of weeks ago. we are not quite sure where we should be, just that we have been hire than that for a long time. ken, ben bernanke said in this speech, companies are using temporary and part-time workers, having people work longer hours not making that big plunge into
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hiring more people with more money with more jobs that would cause more demand. that is the root of all of this is it not? it is jobs. >> it is jobs. it is very painful and going to be painful for a long time. i want to make one point about president obama's policies that i think will be difficult for him to make in the campaign. i want to say i had a small roll as an economic adviser to john mccain in the campaign. this problem was not created in the last year. it was created over eight or ten years any administration, any administration was going to be looking at huge unemployment. there are no easy things to do now. really, we are having to shift jobs to where they are, things like health care, we are probably never going to have a huge auto sector. there are things we can do, but
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we were consuming like crazy. you said the savings rate was 6%. it had been 0% that is not normal 6% is normal. >> it is not terrible that people are saving money and paying down debt. >> it is just hard for recovery. >> it is terrible that people don't have jobs. >> yes, let's carry this a little further, if what ken is saying, the bottom line is we have a situation where people are talking about the pro spects of a double dip recession, do you see out there, any reasons for optimism? >> well, going to offer a suggestion which is actually the opposite of optimism but the only thing the president can do. and have rom eman yemanuel and vid axelrod are watching, they
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are going to though their shoes at the television. the president has to make a blood, sweat and tears speech. he has to say these are serious problems. that whole notion of recovery summer was a quick fix. this is a problem that has been growing for two decades and it will be hard to turn around the ship of an economy. people are smart, they see where the jobs are going and people don't want a snake oil salesman in the white house. >> john, the white house has lost control of that message. it might be a good message to put through. judge but it is not true. >> they did things like say a year from now we will see lower unemployment rates a year ago. that is kind of how it goes, how do they balance that? how do they come into this election and taught successes in a world that most people see
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empty not full? >> across tspectrum, republican say they can make the case that it helped maybe not as much as they had hoped but it helped. but ali, you have to think, what can the president do? number one they tried to have it both weigha ways. and then the president goes out and says it is a deep ditch and it will take a long time to get out. but they only have 60 days election day and people are looking for results. we can talk about the stimleulu and tax cut debate. every state has had to make tough choices and just about every american family has had to make very, very tough choices and the republican message is
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what tough choices has washington made? have we had big changes in anyway or are we still deficit spending? it is a tough argument because that spending is part of the stimulus and some say by god, it was necessary. but the republicans are taking advantage of this and they are saying what is happening in washington? >> what a great conversation with all of you, john king, every night at 3:7:00 p.m. eastern. and global editor at large at r reutter's. thank you to you all. when you enter the voting booth in november the economy is likely to be at the top of the mind. we have the plans to turn it around we'll lay it out for you when we come back.
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two live pictures right now in the nation's capitol on the right you are seeing the wrapping of the three-hour event that has been called "restoring honor" the steps of the lincoln memorial. and on the left you are seeing the "reclaim the dream" rally. the reverend al sharpton there. this reclaim the dream event. let's listen in. >> when do we want it? when do we want it? hug the person next to you, tell them reclaim the dream! let me thank all of you that came from all over the country. this is not a rally, this is a march. and we're getting ready to line
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the streets of washington. by the thousands. because others marched, we have a different life. but we've got to keep that going so that our children will have even better life than us. somebody said why are you all marching? why are you all rallying?
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storm. we got into turbulence, the plane started shaking, plane started dropping, i looked out the window couldn't see because it was cloudy. for about 15 minutes we went through a turbulent storm but after a while when we cleared the storm and i saw sunshine, i didn't get off the plane.
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we just got through the storm we haven't arrived yet. just because we got through the storm doesn't mean we arrived. we are still doubly unemploy ee black to white, we are not there yet. >> you are listening to the reclaim the dream march. they will be marching to the future site of the mlk national memori memorial. we will continue to watch this march that is underway right now at dunbar high school just as all morning long we have shown you another rally that has taken place at the steps of the lincoln memorial lead why conservative talkshow host, glenn beck. we will have complete wrap ups of the events at the top of the hour, hope you join us then.
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thank you. >> they are running out of options to try to sort of prop this up. >> i mean it is puzzling that that $8,000 coupon drove housing sales as much as they did. if interest rating are as low as they are, why is that not goosing people to get in. poll after poll after poll has said since the end of 2007, that the economy is issue number one more americans. take a look at the new cnn polling on this 56% say this is the most important thing to them. number two is unemployment. 48% say the deficit, that is also the economy. then terrorism and health care, 45% and social security 42% it is very, very clear roland that voters are looking for solutions against a negative economic background.
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what can democrats and republicans do about it? >> here is the fundamental problem that democrats face. we were in such a dire situation that it has taken all of this to get out of it, and you have had incremental growth in the private sector job growth. the problem is how do you explain that? yeah, i know it is tough but you are going to have to wait at least two years? >> how do you? clearly they have failed to do that and voters are now not clear, what would you do? >> again, i think from the president's standpoint the narrative has been horrible. the communications team should be on fire. frankly they have failed mi miserab
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miserably. it is a shock that here you have ed hen try talking to sean donon who runn es hud. you have to have the labor secretary out and you have to have your commercial ae and ene secretary out. the second thing, you can't keep sending the president out with the same message. what people have to say is here is the project. you have come to see signs across the country this project is a result of stimulus dollars. they tried to appeal to republicans by making one third of the project tax cuts. we saw what happened with the bush tax cuts how that ruled the deficit. it was about seeing things happen. >> let me pick up on a point that you made with ed. ed is out with those tours that he does and ed, to the point it
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does sound like the same message that sl in touch with our own polling that says this is a problem. how do they deal with this? are they getting the message? >> i think it is unclear whether or not they are really listening and are implementing a new strategy to show that they get it. he makes a point about the president being the messengers out there. we've seen it continue and that is in part because secretary geithner hasn't had a lot of kriblt with the markets. you have had the president pounding the same message over and over. when he kaem out the head line was welcome to the recovery. this was supposed to be recovery summer. that set expectations pretty high and they are still not
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feeling it. >> ali, i want to throw this in. historically the commerce secretary has been the person who was the point person when it comes to business. when have you seen gary locke talk about small businesses and job creation? you talk about housing african-americans stand to lose 50% of wealth as a result of the foreclosure crisis. where has sean donovan been when it comes to saying here is what we are doing when it comes to housing? where have the cabinet secretaries been when it comes to driving these conversations? i think that alleviates the job of the president when it comes to being out there and he tells people this is what we're doing. >> ed has sean donovan on "state of the union" this weekend. you make a good point.
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thank you. ed, i will see you several times this weekend on television. ed is with the steak out every day on my show at 2:40 eastern every day and he has state of the union this weekend. thanks guys. which states are holding up? which ones are in krcrisis mode i'll give you the state of the states when we come back. ...the routan, and the cc. that cc is gorgeous. that jetta is awesome. my wife loves her new routan. and they all come with that carefree maintenance. scheduled maintenance included. we're not shopping for cars here, people. c'mon! well, i am now. that's kind of exciting. [ male announcer ] right now, get 0% apr on 2010 models, excluding tdi. or get a great price on a certified pre-owned volkswagen. on 2010 models, excluding tdi. in 2008 i quit venture capital to follow my passion for food. i saw a gap in the market for a fresh culinary brand and launched we create and broadcast content and then distribute it across tv, the web and via mobile.
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we want to look at the economic climate across the united states. michelle jones is the senior vice president of counseling. michelle, thank you for being with us. the new index that is out measures the financial stability of households across the country. the stuff that makes you feel pre prosper rouous or secure.
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red is a state of emergency. orange means distressed, green is doing belt ining better. i don't see green on that map. i see nevada in red and most of the country is distressed in orange. am i reading that right? >> that is right. you are reading it correctly. i'm sorry very tough economic condition that is house how ohoe facing across the nation. >> i'm not seeing excellent, i saw one good or two states that are good. we are seeing the healthiest states are where they are, north dakota, south dakota, wyoming, these are places where unemployment is very, very low. nevada, michigan, florida, places like that where industry has left and foreclosures are high. that seems to be the indication
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i'm making. it has to do around housing and job rates. but where you see those areas, you see people who have net worth or management of credit. you have to keep in mind those states that aren't disstretress you didn't see a bust either. >> we are showing you maps but you guys have done a study on this. there has been improvement. >> that is right. we are seeing a grad wail ual increase, it is slight but we are seeing things start to move in the right direction. >> let's look at the parts of this. the two things that we always talk about employment and housing. let's look at your index for employment and how that breaks
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down. tell me -- wow, there are a lot of places that are in emergency again. the good states are vermont and a few down the middle. >> still a great deal of unemployment. we are taking unemployment and under employment into account. there is a large area that still has a lot of employment problems across the nation. >> can one take from that map that if you are unemployed and you are looking for work and you are able to move that is a good starting point for places you might move? >> the places that you see the stronger scores are the places that are less populated. even though their rates have crept up, you could have a two-fold increase in new yonort or south dakota and that will still only take you to 4 or 5%.
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>> great conversation. listen, you need to take a stand and protect your money. defensive investing bring your pen out i'm going to give you some names. [v:tv][c [panting] mark! anna! aah! aah! ha! ah!
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kell well, fears about the economy have people worried about what to do with their own money. liz an, this has people confused and driven people out of stocks and mutual funds. >> i think too often prescriptions are given for investors as if they are all one in the same. it defepends on what your tolerance for risk is.
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we know that outflows have been huge. bigger this year than in 2009 believe it or not. i think there are things you have to be mindful of if you are plowing a tremendous amount of money into the fixed income side of the leather and it is not without risk. >> doug, you help people come up with portfolios and you think there should always been bonds in there but there is a common believe that owning bonds is less risky is that true? >> the problem with individual bonds is that most people buy them to hold them to maturity. they sort of peak and then go down in value. a professional money manager will often take profits along the way. most people don't think of that. a professional money manager
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will provide that for you. >> lizanne, i think you are both saying there aren't large prescriptions but back in 2008, it seemed like we aren't in that sort of market now? >> of course in looking back, we are all brilliant armchair quarterbacks after the fact. there is probably a little more momentum on the fixed income side but i think investors ought to think about taking bonds along the way. take some profits, shorten maturities a little bit at least in the treasury portion so that they can react more quickly, but also there is always the importance that should be emphasized on diversification. >> go ahead. >> do you think you can build a defensive portfolio out of
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stocks today, one in which you prevent big losses but you might get some gains with few exceptions you can gain somewhere? >> prevention if you mean eliminating all losses that is not easy to do unless you are talking hedging with options. some defensive names are offering descent dividend yields. you do have that opportunity to bank the yield which in many cases is higher than on the fixed income side. >> doug, do you agree with that and if so are there places that you think people should be considering increasing their allocations of rather than decreasing? >> on the equity side? >> yes. >> absolutely. everyone thinks utilities is a
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safe place, but technology is undervalued. you have to know what works for you, adding technology may not work for you. if you are already well diversified, that might be a space where you can move to another area. there are opportunities out there. >> what about should we be diversfying more into things like precious metals in other countries? >> i think doug made a good point. i think one of the meistakes investors make, they invest based on the labels of things. deep ends can be given lie looking at where the greatest opportunities are. you have to judge defense in terms of where the opportunities are and where valuation is reasonable and that can come in
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sectors. i would agree technology being one of them where you may get some defense because grown is high and evaluations are low. >> all right in other words, you can't be lazy about this and say i'm throwing my money into x -- x part of the world, x industry, you have to do some work. that work can be done, doug, how much needs to be done my people right now? are there ways to put your money into funds or do you have to learn what you are investing in? >> i think it is important people now need to do more homework. most people are not going to do the work necessary there. i manager doing this every day should be bringing you value. staying away from treasury, you will get more opportunity right now by taking more risk even in
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the fixed income space. not a lot on the fixed income side. flefrmib flexible income funds that is a category you can look up. that is where you want to look. >> and income funds as well? >> those are the same category. they are interchangeable. b but those are the ones where you can go to global bonds. in 2007, it was 25% because of the changes to fannie me. if you buy a fund, you are getting three quarters government bonds in there. that is yesterday. so flexible income is more risky, but the yields are much higher. >> i guess people are going to have to do research into what they do but do it, it might pay off for you.
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thank you to both of you, we will k talking to you both again i'm sure. the city of philadelphia, te telling bloggers pay up or shut down we'll explain why after the break. ish when you approach things from a different perspective, you don't end up with just another car. you end up with the all-new saab 9-5 luxury sport sedan.
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this is the part of the show when we break down some of the most intriguing headlines of the week. joining me to do that are our guests. listen to this one guys, ever heard someone say turning your passion into a business is a good idea. if your passion is blogging and you live in philadelphia, the government isn't giving you an option. the government says anyone who runs adds on their sites will be required to pay a $300 business license. that seems strange when the cost of a license seems more than the
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revenue of most bloggers. >> the devil is unthe details here. it is a fee up to $300. secondly as the philadelphia authorities say, a lot of these bloggers are running effective businesses and don't realize when their hobby has become a profession. there is no difference between a blogger and somebody running a small store. keep it in perspective. i think this is blown out of proportion. >> what do you think roland? >> we should be encouraging folks for more information but i believe we have to recognize these are indeed businesses. if you are out raising revenue, and you are operating that business you might have employees and taking taxes as well. it makes sense in these times when frankly, cities are looking for revenue themselves and also
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to spur economic growth. again if it is a sliding scale it makes a lot of sense. >> richard? >> ali, i guarantee you this, the 18-year-old who has a couple of adds on his blog is not going to have to buy the $300 license. ha is not what this is about. what this is about, is people who are making serious money or income style money and that is how they are going for and you can't have it both ways. there is my favorite friphrase this show, you can't on one hand complain about deficits and cuts in spending but the next time the moment somebody finds a way of raising revenue say -- >> and the mayor of philly is good about doing that. facebook, now being given a value, $34 billion, that is five times the value it was given
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about a year ago, why is facebook worth so much more than many of it's tech counterparts. i have to tell you facebook has been the big advancer on this one roland? >> rii'll never forget when financer. >> i'll never forget when he was interviewed, and asked, hey, will yahoo! buy you? wait a minute. do you know how much money we make compared to what they make? all these internet evaluations are stupid, okay? i don't care about an valuation. how much do you make? are you generating any dollars. this goes to pie in the sky nonsense we keep seeing from tech companies. go make some money, then talk to me. >> what do you think? >> a good point but when google came to the market and look at google's share price now.
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google does have real revenues. hp and dell battling over a country none of us have ever heard of, that even has no profits, and they are paying up to $2 billion for it. no, facebook has eyeballs, eyeballs by the gazillion and that's what you're paying for. but roland is right. let's wait and see if you can convert that, that inflated valuation into real money. >> into a way to make money. stick around. richard mentioned google. another way to make free calls on the internet. at what point is the actual telephone going to become like the typewriter? we'll check it out. one chili powder, one teamwork and one green energy, you come up with this week's turnaround. here is stephanie elam. >> reporter: ben's chili bowl is famous in washington for chili cheese fries and sausages.
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they are also making sure not to leave its mark on environment. >> we switched to 100% wind power in 2007 three years ago and renewed another three years. >> reporter: by going green, the restaurant's savings is minimal now but they will save big over the long hall. >> you can make money by doing the right thing, fighting climate change, supporting clean energy, growing a business. >> they aren't going alone, he joined up with other local businesses at a reduced rate. >> they looked and said, okay, this is the rate we can get if you sign up together. it's a pretty good rate. >> they buy 2 million kilowatt hours of energy. >> for every kilowatt they took, they are putting it back into the ground. not necessarily for their house or business, not necessarily but the same kpak environmental
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environment if it did. >> no equipment needed, billing is the same. >> the rate that they are paying right now is 8.926 cents per kilowatt hour. that's what they are getting for 100% wind power. the current rate if they did switch over to wind power would be over $0.09. >> whether it's a new marketing campaign or you feel in your heart it's a right thing to do, it's beneficial in all ways for your business. >> reporter: stephanie elam, cnn, new york.
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we are back with roland and richard. richard, a segment that airs on my show and his show on cnn international called q&a. all you have to do is send us a treat@ali velshi or use the hash tag cnn q&a. send us the question, we'll answer it. we'll compete to get your attention. google allows folks in the u.s. and canada to make calls online for no charge. i can get incoming calls as well. the only catch, you have to have a gmail account, which is not much of a case because it's
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free. richard, it's become increasingly clear the internet is going to take over traditional phone and cellular communications. how far are we from that? >> alli, i found this the most interesting story of the week. skype is now, the biggest rival to this new one, skype is the largest international phone network in the world. more people are not only skyping, skype to skype, skype in, skype out. google with vast resources is going straight for the skype jugular. whether or not it can take over the loyalty most kind users have to the kind account will be fascinating. google doesn't do anything by halves. i've used both systems now and i can honestly tell you that google is in this for the long-term and is going to give skype a run for its money. >> they are in for the long-term. roland, what do you think of
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this? >> obviously when lou at how with the ipad, samsung coming up with device, other devices where they are getting smaller, allows for you to have these smaller computers. also, think about large companies we're used to at&t, phone service for decades but they are doing gang busters when it comes to selling broadband, cellular service as well. i've got to say, i appreciate the internet. you know what, alali, when the power shuts off, the old reliable phone still works. >> doesn't has p that often, shutting down. >> actually it does. i live in an apartment building, huge high-rise in chicago, it goes up and down. what happens is when your whole life is based upon broadband and it goes down, you go nuts if you're getting phone service, television, radio, everything. you may want to go back to the traditional way, which is very helpful. >> richard doesn't even know what to say about


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